At Rs 85,5oo crore, PSU banks log highest ever half-year profit

MUMBAI: Public sector banks have reported a collective net profit of Rs 45,545 crore for the Sept quarter, an increase of 35.4% over Rs 33,639 crore in the year-ago period. The operating profit for the first half of FY25 was Rs 1.5 lakh crore, up 14.4% year-on-year, while net profit stood at Rs 85,520 crore — a 25.6% increase over the same period and the highest in any half year, a govt statement said. The finance ministry issued the statement following a review meeting with public sector lenders to take stock of reforms.
The increase in net profit was primarily driven by better asset quality, which lowered the provision requirement. Additionally, banks were relieved from the one-time staff cost provisions made in the previous year. Net interest income improved as credit growth surpassed deposit growth. A change in RBI regulations, treating penal interest as fees, boosted other income. Many banks also booked treasury profits and reversed previous mark-to-market provisions, benefiting from the decline in govt bond yields following India’s inclusion in global bond indices.
In absolute terms, the biggest contribution to the incremental profit came from SBI, which reported a net profit of Rs 18,331 crore for the quarter, the highest among any listed entity.
In percentage terms, the highest increase was reported by Punjab National Bank, whose net profit rose 145% to Rs 4,303 crore. Every PSU bank has reported a double digit increase in net profit in the quarter. Canara Bank recorded the lowest growth at 11% with a net profit of Rs 4,014 crore. Bank of Baroda had the second-highest net profit among all public sector lenders (Rs 5,237 crore).
The improvement in financials has also increased the market value of PSU bank shares. The collective market cap of public sector banks stood at Rs 15.7 lakh crore. As of Sept 2024, the gross non-performing assets of PSBs was 3.12% and the net NPA was 0.63%, showing a year-on-year decline of 108 and 34 basis points respectively, according to the finance ministry. The capital adequacy ratio stood at 15.43%, well above the regulatory requirement of 11.5%. PSBs have also made strong progress in adopting new tech, the statement said.